Gilson, Stuart C. →

Cruising in Crisis: How Carnival Is Riding Out the COVID-19 Storm

COVID-19 has devastated the cruise industry, but one company may emerge stronger: Carnival. A case study by Stuart Gilson reveals how the cruising juggernaut is navigating the pandemic. Open for comment; 0 Comments.

Coronavirus Could Create a 'Bankruptcy Pandemic'

An expected explosion in bankruptcy proceedings over the coming months could overwhelm the courts, says Stuart Gilson. Open for comment; 0 Comments.

Cashing Out: The Rise of M&A in Bankruptcy

One consequence of the 2008 financial crisis was the virtual disappearance of traditional mergers and acquisitions activity. The years following the onset of the financial crisis have demonstrated, however, that M&A deal making is alive and well—in Chapter 11. In this study of a large sample of Chapter 11 cases, the authors examine how and why M&A has become a significant part of the process, arguing that the rise of M&A has blurred the usual distinctions between reorganization and liquidation. Closed for comment; 0 Comments.

When Do Analysts Add Value? Evidence from Corporate Spinoffs

The impact of financial analysts on capital market efficiency has been much debated in academia and in practice. A large body of academic research finds that analysts act as important information intermediaries who contribute to the overall efficiency of capital markets. Other research, however, has identified contexts in which the value of analyst coverage may be relatively more limited, such as when analysts face possible conflicts of interest, or when the company or situation they are presented with is especially complex. Still other research questions the informativeness of analyst recommendations in light of regulatory changes. In this paper, HBS doctoral graduate Emilie Rose Feldman and professors Stuart C. Gilson and Belén Villalonga examine 1,793 analyst reports written at the time of corporate spinoffs to determine how much value analysts create as information intermediaries in this setting. Spinoffs provide an interesting context for this purpose because the degree of information asymmetry between corporate insiders and investors is especially high. The paper is one of the first to provide very fine-grained detail on the quantity and types of analyses included in analyst reports. Key concepts include: Analysts pay relatively little attention in their reports to the subsidiaries that will be spun off, even though subsidiaries generally account for an economically significant share of firms' operations before the spinoff. The complexity associated with forecasting earnings and stock prices in the context of corporate spinoffs, combined with analysts' apparent disregard for subsidiaries in their analysis of corporate spinoffs, seem to limit analysts' ability to add value as information intermediaries in this setting. The potential for analysts to add value in this situation is especially high because while the new entities created by the spinoff have no stock price history—similar to an IPO—analysts may have been following the businesses of the parent and subsidiary for an extended time, giving them a comparative advantage in forecasting both entities' future financial performance. Closed for comment; 0 Comments.